Against the backdrop of a strengthening dollar, gold quotes are declining. Thus, XAU/USD is trading near the 1880.00 mark, approaching the important support levels of 1873.00, 1858.00, 1851.00. Their breakdown can significantly aggravate the situation and reduce the optimism of buyers of this precious metal. In this case, the risks of a further decline in gold quotes and a fall in XAU/USD towards long-term support levels of 1738.00, 1672.00, which separate the long-term bull market from the bear market, increase. But until the support levels of 1858.00, 1851.00 are broken, it is premature to talk about breaking the uptrend.
Investors will now be keeping a close eye on the Fed's actions and how it handles inflation without hindering the growth of the US economy and a significant increase in unemployment. Thus, data released last week indicated the first contraction in US GDP since the start of the pandemic, while inflation accelerated and reached its highest level in 40 years.
If market participants see that inflation continues to grow despite the efforts of the Fed to contain it, and geopolitical tensions worsen in the world and economic conditions worsen again, they will again return to active purchases of gold, preferring it to other protective assets, including dollar.
Support levels: 1873.00, 1858.00, 1851.00, 1832.00, 1800.00, 1785.00
Resistance levels: 1913.00, 1918.00, 1926.00, 1958.00, 2000.00, 2070.00, 2075.00
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Source: InstaForex
